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Ron Conway is a Silicon Valley startup's best friend

The prolific angel investor has rarely met an Internet startup he didn't like. When it comes to picking the next big thing, there's a right way and a wrong way. And then there's the Conway.

Ron Conway, with Coco, his rescue dog, photographed at their San Francisco home

FORTUNE -- The rooftop deck of Ron Conway's San Francisco apartment building is packed with a random and seemingly incongruous assortment of tech A-listers, celebrities, and sports stars snacking on hors d'oeuvres and sipping fine wines. Conway, Silicon Valley's most prolific startup investor, has graciously opened his tony Pacific Heights pad, which has sweeping views of the Golden Gate, to let about 150 of his closest friends get a good look at the Blue Angels, the U.S. Navy's aerobatics team, which are in town for the weekend.

During the October party, Conway buttonholes a number of his guests to help with his latest project: a music video to promote the election campaign of Ed Lee, San Francisco's tech-friendly mayor. One by one, Conway pulls aside the likes of Marissa Mayer, the Google exec; Biz Stone, a Twitter co-founder; Jed York, the owner of the 49ers; and Brian Wilson, the San Francisco Giants pitcher. On a quiet comer of the deck, each of them performs a few hip-hop moves for the camera while lip-syncing to the refrain of MC Hammer's "Too Legit to Quit" for a remake of the rapper's 1991 hit. (The video ended up featuring cameos from other Conway pals, including Will.i. am, of the Black Eyed Peas, Ronnie Lott, the 49ers legend, and, of course, Hammer, a longtime friend.) The whole affair is classic Conway: mixing work and play, pulling together connections from the worlds of Internet investing, celebrity, philanthropy, and now politics to push his agenda. The video quickly went viral, and Lee handily defeated his rivals in the mayoral election.

At first glance, Conway is the last person you'd expect to find around this kind of high-wattage circle. In the crowd of hoodie-wearing twentysomething entrepreneurs and flashy stars that he often hangs out with, Conway is easy to spot He's the 60-year-old guy with an ample girth, a full head of snow-white hair, khakis, and a crisply pressed shirt that might have come from the Brooks Brothers catalogue. Yet Conway sits at the intersection of these worlds, connecting people and steering money, talent, and ideas to companies in a pugnacious style that seems almost a throwback. "I call him the human router," says Netscape co-founder Marc Andreessen, who now runs a high-profile venture capital firm and sits on the boards of HP (HPQ), eBay (EBAY), and Facebook.

Conway may not be a brand name outside of tech circles, but in the startup-fueled economy of the Bay Area, he's a ubiquitous character with an outsize personality who is often called the godfather of Silicon Valley. It's a moniker he's earned, in part, by investing relatively small sums in more than 600 Internet companies since the mid-1990s. Hundreds went bust, but there are a few you might have heard of. In the first Internet boom, he bet on PayPal and Google (GOOG). In the social media frenzy that is fueling the tech world nowadays, Conway has invested in Groupon (GRPN), Twitter, Square, Dropbox, and Airbnb -- and those are just the companies whose valuations top $1 billion apiece. Others, like AdMob, Mint, and Zappos, have already sold for nine-figure sums. If startup investing is his day job, nurturing startups and their founders is his religion. Conway crisscrosses the Valley -- and the country, often visiting New York's Silicon Alley -- to pitch in for his companies, helping them recruit, fix a management problem, or close a round of financing.

In the process, he's been known to tussle with anyone he perceives as getting in the way, including other investors or powerful journalists like the Wall Street Journal's Walt Mossberg. Many entrepreneurs love him for it. And many more depend on him because he willingly grants them access to what is widely believed to be the most prodigious Rolodex in Silicon Valley, an über-contact list that captures every sector of the tech ecosystem, from venture capitalists to corporate lawyers, recruiters, public relations handlers, journalists, and corporate execs (translation: potential acquirers). The list includes top names from the worlds of banking, media, telecommunications, advertising, retailing and politics. And celebrities such as Ashton Kutcher and Will.i.am are now also part of Conway's circle after he let them in on one of his investment funds, or opened doors for them in the Valley, or donated large sums to their favorite charities. "There isn't anyone he doesn't know," says Ben Rosen, a legendary technology investor and longtime chairman of Compaq Computer, who invested alongside Conway in the 1990s. "He was the Facebook of the industry before there was a Facebook."

Conway's membership on the Valley's A-list was not preordained. As a so-called angel investor, who typically invests from $50,000 to $200,000 when a startup is still embryonic, he was often seen as playing second fiddle to deep-pocket venture capitalists. His scattershot approach to investing was often ridiculed for its apparent lack of rigor. And the dotcom bust left him badly bruised. But tech startups are once again driving Silicon Valley, and Conway is back on top. The clearest indication of his influence: He has attracted scores of imitators, professional investors who have become known as "super angels" and who have elbowed out venture capitalists in many hot deals. And even some venture funds, like Google's venture capital arm, now follow the investment model pioneered by Conway.

"He made angel investing important, he made it popular, and he made it okay," says his friend Bill Campbell, who is known in the Valley as "Coach." "The Valley would be very different without Ron Conway."

CLICK ON THE IMAGE FOR A LOOK AT SV ANGEL'S CURRENT INVESTMENTS

Ron Conway's firm, SV Angel, is a lean operation. Although it is on its third fund, has made more than 300 investments in Internet startups, and currently has 200 active companies in its portfolio, it has no offices, a rudimentary web page, and only a bare-bones staff. Conway is the biggest investor in the fund and holds the title of special partner, but officially he has no operational role. (The funds are managed by David Lee, a former business development executive at Google.) But not much happens at SV Angel without Conway.

While SV Angel takes no board seats, you would not describe Conway and Co. as passive investors. Conway says he offers a mix of mentoring, strategic advice, business development, fundraising, and help with M&A -- pretty much what most early-stage investors promise. But for young entrepreneurs, Conway's contribution takes a tangible form early on. Shortly after being admitted to the Conway clan, they receive a spreadsheet. It's called the SV Angel "partner list." In a tiny font, it stretches to 18 pages and includes the names of more than 1,300 well-placed individuals in the world of business. Tech companies are well represented, of course. There are nearly 50 Googlers on the list -- including Larry Page and Sergey Brin -- as well as top brass from Microsoft (MSFT) and the chief executives of Intel (INTC), Motorola (MMI), Salesforce.com (CRM), and Twitter.

The partner list stands out as much for its breadth and eclectic mix of personalities as it does for its sheer size. Sir Martin Sorrell, who heads advertising giant WPP Group, is on it, as are the CEO of Wells Fargo (WFC) and the chairman of the Washington Post Co. (WPO), not to mention top execs from the Oprah Winfrey Network and Safewayn (SWY). A Conway investment comes with the promise of a handful of introductions, if needed, to anyone on the list The spreadsheet has a powerful effect, especially on the ambitious young talent that typically gets admitted to Conway's network. "I opened the spreadsheet, as a 22-year-old trying to build this business," says Dan Greenberg, the CEO of Sharethrough, a startup company that distributes video content online. "I was floored."

Conway makes it clear to his brood of entrepreneurs that he will dispense help only when needed, at what he calls "inflection points." At those critical moments in a startup's life Conway responds quickly -- and so do those in his network. There was the time when a top executive at Tellme Networks, a telecommunications startup, e-mailed Conway in desperation at 11 p.m., as a business deal with Verizon (VZ) was falling apart. Two minutes later, Conway's reply came, in all caps: "AM ON IT." By the next morning Conway had arranged a meeting with the Verizon president, which led to a nine-figure contract with Tellme. Microsoft eventually bought Tellme for $800 million.

Plenty of investors open doors for their companies, but part of what makes Conway so effective is that he's on all the time. He has no hobbies other than philanthropy, and his social life revolves around the Valley's conference, party, and charity fundraiser circuits. Those events are just opportunities to work his Rolodex. Back in 2009, for instance, while attending a fundraiser for College Track, a nonprofit founded by Laurene Powell Jobs, the wife of Steve Jobs, he took aside Twitter's Stone and introduced him to Scott Forstall, Apple's mobile software chief. It was the beginning of a corporate friendship that led to the integration of Twitter and the iPhone and the iPad. "The relationship with Apple was a huge, huge deal for us," says Stone, who has since left Twitter.

Conway's Rolodex isn't strictly for business -- at least not in the conventional sense. Stone says it was not atypical for Conway to call him at Twitter in the middle of the day to announce he was coming over with Kanye West or Will.i.am, just as a treat for employees. (Stone came to refer to the coterie of business types and celebrities that often accompany Conway as the Rontourage.) Conway has helped to get the children of entrepreneurs into elite Bay Area private schools where he is a donor. When Conway learned that the father of Evan Williams, another Twitter co-founder, was diagnosed with an illness, Conway put him in touch with the top specialist in that field at the University of California San Francisco Medical Center, where he is a major donor and fundraiser. Quips Stone: "He's an angel investor and a health plan and social-event planner all in one."

Conway says his friend Will.i.am's house is decorated in the same Louis XV style as his own flat.

Conway goes out of his way to burnish his reputation as guardian angel to entrepreneurs, frequently recounting stories of newbies he's taken under his wing -- like the time he dissuaded Airbnb CEO Brian Chesky from taking money from a large investor he won't name in favor of a smaller deal led by Andreessen's firm. (Conway convinced Chesky it would be better for the company in the long run.) In turn it is not hard to find entrepreneurs indebted to Conway. "I don't know where I would be professionally without his help," says Napster founder Shawn Fanning, who had Conway invest in all five companies he started. The lovefest, of course, is good for business: It helps Conway's investments and, in turn, it drives more deals for hot startups his way.

But in recent years, some of Conway's boisterous crusades on behalf of entrepreneurs have begun to wear thin in some corners of the Valley. In 2010, for instance, Conway railed against a group of angel investors who had met to discuss rising valuations and other issues. Conway, who was not at the meeting, saw the confab as anti-entrepreneur and lashed out. "The world of startups would be a better place if you spent less time complaining about deal structures, terms, VCs, and valuations etc and the cars you drive, and just helped entreprenuers [sic] build their companies," he wrote in an e-mail that was widely leaked. He accused the group of lacking integrity and singled out Dave McClure, a rival super-angel, for "unprofessional classless writings." The incident, which the tech blogs dubbed Angel-Gate, caused plenty of bruised feelings, though it was quickly forgotten. And even many of those who came under withering criticism continue to do business with Conway. "I've seen Ron be a hard-ass at times, but overall he is a pretty friendly guy," says McClure.

Privately, Conway talks of "slapping down" investors far more powerful than he is, and admits that many of the Valley's most prestigious players find him overly meddlesome at times. "I couldn't care less who is mad at me as long as the entrepreneur comes out ahead," he says. Many of those who do business with him acknowledge that friction is not uncommon. Sequoia Capital, for instance, has worked with Conway for nearly 20 years. Their relationship is "good 90% of the time," says veteran partner Doug Leone. "Ten percent of the time it is less than good."

Conway, a regular at many Valley events and conferences, with MC Hammer.

Conway's frequent outbursts -- and his grudges -- are not just aimed at other investors. After Mark Zuckerberg appeared to be close to a meltdown during an on-stage interview at the AllThingsD technology conference in 2010, Conway chewed out one of the interviewers, columnist Mossberg, in a series of e-mail exchanges that Mossberg read to Fortune. In a withering missive Conway essentially accused Mossberg of bullying Zuckerberg and demanded a public apology. Yet Zuckerberg himself later thanked Mossberg in an e-mail for a "good interview," and other top Facebook officials told Mossberg they were grateful that he had handled the situation professionally. "Your tirade is not only insulting, it makes you look like an ass," Mossberg replied to Conway. Conway wrote back: "We are all entitled to our opinions. I'm sticking with entrepreneur."

Conway does little to hide his mercurial side. Two years ago, at one of his well-attended Christmas parties in San Francisco, he had asked Will.i.am to speak about philanthropy. But when the rapper went on stage to speak, the crowd of hundreds paid no attention and continued to socialize. A visibly flustered Conway grabbed the microphone and began berating his guests. Says Marc Benioff, the CEO of Salesforce.com and a close friend: "It was quite the spectacle."

Ron Conway landed in the tech industry by happenstance. He was raised in the Bay Area at a time when much of Silicon Valley was still covered in orchards. Born in 1951, Conway was the sixth child, tied with his twin brother, in an Irish Catholic family of 12, six boys and six girls. He attended Catholic schools, first in San Francisco and later in upscale Atherton, a few miles north of Palo Alto. His father was a senior executive at American President Lines, the shipping giant. Conway was an average student who, upon graduating high school, went to community college and later transferred to San Jose State University, where he earned a degree in political science.

After graduating, he landed a job at National Semiconductor, where he rose quickly through the ranks. In 1979, he left to join the team that founded Altos Computer Systems, a pioneering maker of microcomputers, as vice president of sales. When Altos went public in 1982, Conway became a multimillionaire. He left in 1985, but Altos faltered, and its founder and chairman persuaded Conway to return as CEO three years later. In 1990, he sold Altos to Acer, a Taiwanese computer maker, cementing his personal fortune. "Technically, I never had to work after Altos," says Conway.

He threw himself into philanthropic causes like the Ronald McDonald House at Stanford. He also bought a majority stake in Personal Training Systems, a computer-training company, which he sold a few years later. By 1994 he had discovered his true passion, as he began his angel investing career, first teaming up with Ben Rosen. "We decided we were only going to invest in this thing called the Internet," Conway says. "It's the most significant decision I made in investing."

Conway and Rosen invested in a couple dozen startups, syndicating deals with other investors. By 1998, when the Internet frenzy was going full tilt and Conway was doing one deal every month, he decided to create a fund so he could make larger investments. Angel Investors I raised $30 million in 1998, and a subsequent fund the next year raised $150 million. Through his time at Altos and National Semi, Conway was already hyperconnected in the computer industry, which ruled the Valley in the 1980s. He tapped into the younger Internet generation by courting the newly minted millionaires from Amazon (AMZN), eBay, and Yahoo (YHOO) to invest in the funds. They, in turn, would help Conway find the best startup deals.

Conway and Ashton Kutcher

The Angel Investors funds offered something many well-heeled individuals outside the Valley desperately wanted: the ability to get in on the ground floor in hot Internet investments. Conway milked that to make inroads into the world of celebrity. Through a friend at Intel, Conway met a Los Angeles agent for Shaquille O'Neal, and that's how Shaq became an investor. The agent shared an office with a money manager for Arnold Schwarzenegger, and that's how he became an investor. Conway enlisted Henry Kissinger through a business associate of Rosen's.

Conway worked tirelessly to stay on top of as many promising deals as he could. He spent hours on the Valley's clogged freeways, almost always on the phone, and often taking notes as he drove. This worried his wife, Gayle, so much that she paid their eldest son, Ronny, to drive Conway around when he was home from UCLA during the summer. (His three sons, all UCLA graduates, now work in Conway's universe: Ronny at Andreessen Horowitz; Danny at Airtime, a company started by Fanning and Sean Parker that Conway helped to finance; and Topher at SV Angel.)

Despite his prolific Internet investing, Conway was never much of a techie himself. During the dotcom boom, he would print every e-mail he received, scribble a few notes on it, and hand it back to his administrative assistant, who would respond for him. At home, he would use a fax machine to send the annotated e-mails back. "The fax machine was the most important thing in our household," says Danny Conway. Conway once took his fax machine to the Comdex trade show in Las Vegas so he could stay in touch with people.

Now Conway appears to be on e-mail around the clock. Everyone in the Valley, it seems, has received his boisterous notes, with sections in all caps. But Conway hardly ever uses the services of the companies he invests in. His accounts on Facebook and Twitter are dormant, and he doesn't check in on Foursquare. "I never said I enjoy anything about using the Internet," he says. "I enjoy helping the entrepreneurs who are building this thing that I don't necessarily like or use."

The dotcom bubble didn't end well for Conway, as company after company was shuttered. For his marquee investors, it could have been worse -- much worse -- were it not for three winning bets that pulled his funds out of the red: AskJeeves, PayPal, and, more important, Google. The bust put a temporary end to Conway's investing. But by 2004 he had begun writing checks to startups again.

CLICK ON THE IMAGE TO MEET THE "RONTOURAGE"

Conway's investment strategy has often been derided as "spray and pray." Finding people who criticize Conway openly, however, is not easy. Most venture capitalists know that at some point Conway is bound to send a deal their way and don't want to cross him. But privately many are willing to pan him. "The venture business should be about making choices," says a prominent venture capitalist. "If you pick 100 random startups, you are bound to get a few hits." At best, the venture capitalist says, Conway has an "index fund" of startups, and such funds tend to have worse returns than well-focused choices.

Conway and his team readily admit that SV Angel is something of an index fund of Internet startups -- but, oh, what an index it is! And they reject the notion that they do no due diligence. "The people who say 'spray and pray' don't understand our business and our business model," says Lee. "They have no idea what they are talking about." Lee and Conway say there is a method to what some consider the madness of SV Angel, which invests at the rate of about one startup a week. It reviews only pitches that come through referrals from trusted sources, and for every company it bankrolls, it turns down another 29. (Lee and Conway insist this is evidence of their due diligence.) Yet beyond that, the rigor of their approach is difficult to discern. Conway and Lee never do more than back-of-the-envelope market analyses or financial projections, and technical due diligence is kept to a minimum. A single-page handout prepared for entrepreneurs includes fuzzy criteria like "great team," saying the entrepreneurs are decisive and passionate.

David Lee is managing partner of SV Angel and helps Conway make investments in hundreds of Internet startups.

Last year, SV Angel did something that caused even more tongues to wag: It teamed up with Andreessen and Yuri Milner, the Russian investor who holds large stakes in Facebook, Twitter, Groupon, and Zynga (ZNGA), to invest in every startup that is accepted to the Y Combinator program, a biannual accelerator for startups. That's an additional 120 startups or so per year, for which Conway essentially outsources due diligence to Paul Graham, who runs Y Combinator. "Y Combinator is the Harvard of accelerators," Conway says. Successful startups like Loopt, Airbnb, and Dropbox are all Y Combinator alumni.

Conway won't disclose the returns of his funds. But the clearest indication that the investment model he pioneered may work is that it is now widely emulated. "The lay of the land has changed more and more toward lots of small checks," says McClure, who runs 500 Startups, an incubator and seed-investment fund -- one of many that makes small bets on dozens of companies, or more. McClure credits him with being a "forefather of the movement."

Andreessen, who is an investor in Conway's funds, says the SV Angel portfolio is likely to be among the top-performing seed-investment funds in the Valley. (In classic Valley fashion, Conway, in turn, is an investor in Andreessen Horowitz.) "If someone were to outperform him in seed investing, it is because they got in on the next Facebook and he hadn't," Andreessen says. Conway's strategy may not be scientific, but it recently got one very important endorsement. The venture arm of Google has started spreading its early-stage investments widely.

Conway, of course, cares about his returns. But he also relishes being in the game and playing a central role in a network of financiers, celebrities, politicians, and of course, bright, aspiring tech moguls. "Entrepreneurs, because they need money, they are willing to share their crystal ball with someone like me," he says. "That's the best thing ever." That affinity for founders -- and his willingness to go all out to help them -- may ultimately be what separates mere "spray and pray" from the Conway way.

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